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Revenue Paralysis: The Cost of Website Ignorance

This entry was written by one of our members and submitted to our YouMoz section.The author's views below are entirely his or her own and may not reflect the views of Moz.

Many times as business owners and marketers we are so consumed with making the biggest impact on to the bottom line that we forget to take care of the very foundation our marketing is built upon. We want our website bigger and better than the competition and are in an endless race of producing content, link bait campaigns, acquiring high quality links, consolidating sections of the website, and keeping an eye on external changes or algorithms. All the while technical ignorance creeps in and clutter corrodes the website’s foundation resulting in lost revenue. If this clutter could be identified and fixed, the online revenue potential could be optimized. Taking a step by step approach we can calculate the potential ROI for fixing and maintaining website architecture.

The Expense of Dirty Website Architecture

I am not going to go in depth of the Anatomy of a Perfectly Optimized Page, but it is very important to build and maintain your online business with a solid foundation. There are a myriad of different architecture issues like duplicate content and poor title selection that can have an impact on driving traffic from search engines to your website. It is important to be thorough because there might only be one factor that hurts your website’s search engine performance. Some of the factors include.

Crawlability of Robots

Response Codes & Redirects

Logical Structure

Keyword Cannibalization

Indexing

Internal Linking & Site-wide Links

Mobile Versions

International SEO

A cluttered, unorganized website is rarely caused overnight. Months of neglecting your website has a cost, and it can be very expensive. To demonstrate, here is a slide deck on “A Website Architecture Story.” It shows common activities and how over time, the clutter they leave behind impacts the site’s performance viewed by Google, Yahoo, and Bing.

Doing the ROI Math

Business forecasting is needed on a keyword level to understand the revenue potential of fixing a website. To understand the full scope of the ROI multiple keywords must be calculated. The basic ROI formula can be used.

An alternate formula below can be used if you know the Conversion Value. For our example I will be using the formula above. Earnings = Exact Search Traffic * Google 1st Page CTR * Conversion Rate * Value of a Conversion

Cost = Hours to Complete * Cost Per Hour

Exact Search Traffic = The exact amount of people searching for a particular keyword from Google Adwords Keyword Planner.

Google 1st Page CTR = The Click Through Rate on the 1st page of Google for rankings 1 - 10. You can fill it in with your own percentages, but I will be using the data from this study.

Courtesy of Chitka

Value of a Visitor = There has to be a monetary value placed on a visitor to get the proper calculation. It is best if you have the data from your conversions already, but if you don’t you can use the Average CPC in the Keyword Planner. Businesses will not be consistently spending more money on a keyword than they are making. Since the businesses are paying for the ppc data they see the exact conversion data on the backend, so it is safe to assume there is profit above the Average CPC listed.

Conversion Rate = (This is in the alternate formula) This is your conversion rate for a keyword. It is better to use exact data if you have it, but I will be using a conservative 2%.

Value of a Conversion = (This is in the alternate formula) This is the average revenue made per conversion.

Just as an example I will be using “jewelry” as the keyword we will be targeting.

Plugging the numbers in we get (246,000 * 6.1%* $3.62) = $54,321.72 which is the approximate amount of monthly revenue for the individual keyword if they were in the 5th position. This is still a conservative forecasting, because we are using the 5th position CTR and not 1st position.

Calculating the Cost

Now that we know potential monthly revenue for "jewelry" we need to find actionable steps, associate a time to fix each issue, and then calculate the total cost. Below is a screenshot of a spreadsheet of hypothetical problems.

Disclaimer: This is just an example cost. To rank for jewelry could cost much more than $1,600.

Now are these problems worth the $1600 to fix? It is time to finish the ROI formula to find out. Again to do revenue forecasting we will calculate the ROI over 1 year, so 12 will be multiplied to the monthly revenue.

The 12 month projected revenue for the keyword “jewelry” at the 5th position will be $54,321.72 X 12 = $651,860.64.

ROI = ($651,860.64- $1600) / $1600

Our projected ROI is 406.41% over the first year.

The Money Making Approach

This business forecasting example was based on a few architecture issues, but it could easily be scaled to include other factors and processes like inbound link generation, content creation, guest posting, etc. It is also important to understand fixing architecture issues will have a domino effect to multiple keywords, so the potential monthly revenue could be much higher. The keyword formula can be adjusted if you are in a seasonal industry since most of the revenue will be made within a couple of months.

Here are key takeaways to begin your own online business forecasting.

Identify keywords that can be improved in organic rankings.

Calculate the potential revenue for each keyword. You can be aggressive or conservative in your calculations.

Determine steps to improve the rankings of a keyword.

Calculate the cost of each step.

Calculate the potential ROI

Correct issues and continually test the results.

Again this is revenue forecasting so all of these variables can be changed as needed. This will allow you to see effects that different variables can have on your bottom line.

We have created a basic ROI spreadsheet for our clients at our inbound marketing agency, Find and Convert. We have included a few automated features. These include:

Calculations of a single keyword that is not ranked in the top 10 of Google.

Calculations of a single keyword that is ranked in the top 10 of Google and the ROI improvement.

Calculations of multiple keywords that are ranked in the top 10 of Google and the ROI improvement.

Easily adjusted variables like Google's 1st Page CTR so you can use your own data.

About NinjaNerd —
Avid drinker of energy drinks with a passion to build and manage websites. I love all things Internet and want to compete on American Ninja Warrior which gives me the nickname the Ninja Nerd. You can find more about me and my Internet Marketing knowledge on my website.

23 Comments

Calculating SEO ROI is a step that most people overlook...and it ends up costing them down the road.

Also, good call on the site architecture section. Whenever someone asks me "how can I get more search engine traffic?", like you, I have them look at their site architecture as that tends to cause a ton of issues.

Great post, Josh. SEO can be really complicated when trying to calculate an ROI, especially when you consider that the overall ROI is a constellation of tactics and ancillary strategies that work together to move the needle in a positive direction. It's definitely not as simple as 1 + 1 = 2...

Thanks Brandon! You are right. Calculating ROI is not simple because of all the moving parts. There is also a freshness that Google wants to see which adds to the complexity. A great example of this is a marketing campaign done by rehabs.com. Their campaign "Faces of Meth" went viral in December 2012 and had a major impact on their search traffic via SEM Rush. It was practically non existent before. The search volume dropped after April 2013, and once it leveled it was still much higher than what it was prior. Viral fluctuations add to the complexity of calculating ROI, because the search traffic is greater immediately after the campaign.

Impressive Josh.
Downloaded the template & will definitely give it a spin.

Any insights you can share on how clients react to this kind of approach?
What were the biggest gains for them? Getting priorities straight or get a clear understanding of the budget needed for the impact? Maybe both?

My #1 advice on using this approach is you shouldn't sell on keyword rankings. Some clients have been sold on rankings in the past, and they need to be reeducated. Based on the data you are showing them old habits could come back up. There are no guarantees in marketing whether it is online or offline.

The biggest advantage of using this approach is getting client buy in especially when dealing with executives. It is translating all the technical details that they probably don't understand into business objectives which they do. It is their language. The goal is to show that the work you do will have a positive impact on their bottom line.

Using this approach can help understand what tasks need to be done on the client website, the importance or priority of each task, and the cost both time and monetary for each task. It builds the scope, but at the end of the day the client has to give the green light to proceed.

The last thing I will add is if you have access to their keyword conversion data, it will help focus on what products or services have the biggest financial impact or growth potential. Some people might automatically go to the amount of search traffic, because it is higher. However, there might be another keywords or group of keywords that have a much lower search traffic but would be a better priority to target.

You could also check Hugo Guzman's website (www.hugoguzman.com). He has been the director of online marketing for some major brands. Sometimes he talks about the translation process of SEO tasks into executive speak.

Great work josh, this is such a great effort I always want to have this analysis but end up with what Brian have said in comment but your idea is good and most useful I really want to apply this. Brian is right that most of the times we have issues in site architecture that we do not focus on while judging the traffic loss or gain. We must check this and take necessary action to make it better (search engine and user friendly).

Great article Josh, it's always important to fully take into consideration the costs and rewards before planning any major updates or improvements of any kind. One small point - it looks like you forgot to multiply by 100 to get your % ROI value!

This is an interesting topic and you make some good arguments about the potential cost of a bad site architecture in the long term. However, I feel like your ROI presentation specific to keywords is sort of like making false promises. I know these are speculated calculations but you are working based on the premise that you can actually guarantee a specific ranking for your target keywords. Also since keyword referral data is now limited and even close to zero in some cases, it wouldn't be possible to measure actual ROI for a specific keyword as there is no way to know how much traffic your client's site is getting from that keyword.

Finally, I don't believe that expected traffic shares and click through rates according to SERP positions are a reliable factor that you can base your ROI calculation on. CTR rates are much less obvious than that especially now with more and more non-traditional results (cards, knowledge graph, etc). This post about user intent and CTR from December is very interesting: http://moz.com/blog/mission-imposserpble-2-user-intent-click-through-rates

I would actually look at your landing pages associated with the keywords you are trying to optimize for and set organic traffic goals/conversion goals to measure potential ROI. For example, let's say a page gets on average X amount of organic visits/day and you want to optimize it for a specific keyword/topic. First look at search volumes for your target keywords (try to find out which main keywords your page is already ranking for) and estimate what share of traffic you are already getting and how much room there is for improvement. From there, you could set a goal such as X% more traffic with a timeframe (example: 3 months). Estimate the actual time and investment needed to perform the optimization then calculate potential ROI for this page based onX% higher traffic. This would be based on your actual site's performance rather than potential keyword rankings and expected CTR and it allows you to set actual KPIs to measure success.

I agree that you need to use the most accurate data at your disposal. It is one thing to calculate ROI from two different positions. It is entirely different when a company isn't even showing up in the results. Many companies might not have enough data to create the most accurate ROI. Revenue forecasting by its very definition is a prediction to help guide in making the most educated business decisions. The calculator is designed to show that there is value in having 1st page positions in Google. It is configurable based on your needs. If you believe the CTR is too high then you can lower them.

I'm not much of a math guy, but when people like you are able to logically break down cost and ROI, I am forever grateful. So, thank you again!

As for your thoughts on site negligence, I agree that is something most businesses don't intend to do; it just happens over a period of months and years, but with today's online world, your online presence -- whether it be on social media, your blog or (especially) your own site -- it is your first impression to the world. So, it has to count!